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The United Nations agency for Palestinian refugees has thanked the UAE, other Gulf countries and the European Union for their contributions after their budget shortfall fell drastically despite US funding cuts earlier this year.

In August, US President Donald Trump slashed the entirety of Washington's aid to the agency that helps millions of Palestinians displaced after the creation of Israel in 1948, leaving it facing its biggest crisis in its existence.

At the start of 2018, the UN Relief and Works Agency (UNRWA) faced a $446-million budget deficit, he said. UNRWA Commissioner General Pierre Krahenbuhl thanked in particular Saudi Arabia, the United Arab Emirates, Kuwait and Qatar, saying they had helped plug the deficit by contributing $50 million each.

"You are all aware how difficult this year has been for UNRWA in particular following the unexpected decision by the US to cut $300 million this year of UNRWA's income," he told a news conference in Jordan.

After mobilising to tackle the unprecedented financial crisis caused by the US cuts, "we have now reduced the shortfall... to $21 million", he added.

"This is a very encouraging result at the end of a lot of work," he told reporters after meeting with the agency's advisory commission in Sweimeh on the Jordanian shore of the Dead Sea.

Their combined contribution of $200 million "is almost half of the total amount that we mobilised this year", said Krahenbuhl, adding that aid also poured in from the European Union.

The United States, which was by far the biggest contributor to the UN Relief and Works Agency (UNRWA), announced in August that it would no longer fund the agency.

The administration of President Donald Trump has backed Israel in accusing UNRWA of perpetuating the Middle East conflict by perpetuating the idea that millions of Palestinians are refugees with a right to return to homes in what is now Israel.

Aside from cutting funds to UNRWA, the Trump administration has also cut $200 million in bilateral aid to the Palestinians for projects in the West Bank and the Gaza Strip.

Set up after Israel's creation in 1948, UNRWA has provided aid to millions of Palestinian refugees in Jordan, Lebanon, Syria and the Palestinian territories.